The US economy might be tentative, but it was full speed ahead for the leveraged loan market in October. Returns hit a six-month high, loan prices continued to rise and volume kept on. Defaults? There weren't any, bringing YTD rates to recent lows. These and other trends are detailed in Leveraged Commentary & Data's November US Loan Market Analysis. Connect with LCD Facebook: http://www.lcdcomps.com/facebook LinkedIn: http://www.lcdcomps.com/linkedin Twitter: http://www.twitter.com/lcdnews Web: http://www.lcdcomps.com

1. Leveraged Loan Update
November - 2010
Steve Miller - Managing Director

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3. The loan market in October
• Loan prices hit 3-year high
• Loans return 1.57%
• New-issue yields narrow further as demand
continues
out
• Some aggressive structures (PIK-toggle, cov-
lite) emerge
•Light M&A activity; dividends, refinancings,
bond take-outs rule
• Default rates drop to two-year lows

4. Average bid, loan flow names, 2010 to date
97
96.18
95
outro
92
90
01/05/10 03/04/10 05/4/10 07/01/10 09/07/10 11/02/10
Source: LCD - Leveraged Commentary & Data

5. New-issue clearing yields
9.00%
Double-B: 4.5-5.5%
B+/B1: 5.5-6.5%
8.13%
B/B2: 6.0-7.5%
7.25%
6.38%
October: 6.7%
5.50%
9/09 2/10 7/10 10/10
Source: LCD - Leveraged Commentary & Data

6. Loan returns (S&P/LSTA Loan Index)
9.00
October 2010: +1.54%
2010 thru Oct: +8.4%
6.00
out
HY Bonds +14.5%
S&P 500: +7.8%
3.00
0
-3.00
1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/10
Source: LCD - Leveraged Commentary & Data

7. Leveraged loan volume ($bils.)
20
15 outro
10
5
0
6/09 8/09 10/09 12/09 2/10 4/10 6/10 8/10 10/10
Source: LCD - Leveraged Commentary & Data

8. Loan default rate (principal amount)
12
Why the slide?
9
• Most troubled cos. already have filed
• Recovery, cost-cutting helping EBITDA
6
• Liquidity = extended maturities outro
3
2.3%
0
1/05 3/06 5/07 7/08 9/09 10/10
Source: LCD - Leveraged Commentary & Data

9. Market Outlook
• Loan volume looks to continue at recent pace
• Investors continue to embrace loans, along with
HY bonds, emerging market bonds, hi-dividend
stocks
• Repayments continue to fuel demand by
out
refilling CLO coffers
• Default roller-coaster ride appears over, though
accounts eyeing 2012-13 with caution

10. Leveraged Loan Update
November - 2010
Steve Miller - Managing Director